Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

Is Accenture's Stock Cheap by the Numbers?

Let's take a look.

Numbers can lie -- yet they're the best first step in determining whether a stock is a buy. In this series, we use some carefully chosen metrics to size up a stock's true value based on the following clues:

The current price multiples.

The consistency of past earnings and cash flow.

The amount of growth we can expect.

Let's see what those numbers can tell us about how expensive or cheap Accenture(NYSE: ACN) might be.

The current price multiplesFirst, we'll look at most investors' favorite metric: the price-to-earnings ratio. It divides the company's share price by its earnings per share (EPS). The lower the P/E, the better.

Then we'll take things up a notch with a more advanced metric: enterprise value to unlevered free cash flow. This tool divides the company's enterprise value (basically, its market cap plus its debt, minus its cash) by its unlevered free cash flow (its free cash flow, adding back the interest payments on its debt). As with the P/E, the lower this number is, the better.

Analysts argue about which is more important -- earnings or cash flow. Who cares? A good buy ideally has low multiples on both.

Accenture has a P/E ratio of 16.6 and an EV/FCF ratio of 10.0 over the trailing 12 months. If we stretch and compare current valuations with the five-year averages for earnings and free cash flow, we see that Accenture has a P/E ratio of 20.4 and a five-year EV/FCF ratio of 10.7.

A one-year ratio of less than 10 for both metrics is ideal. For a five-year metric, less than 20 is ideal.

Accenture has a mixed performance in hitting the ideal targets, but let's see how it stacks up against some of its competitors and industry mates.

In addition, over the past five years, Accenture has tallied up five years of positive earnings and five years of positive free cash flow.

Next, let's figure out …

How much growth we can expectAnalysts tend to comically overstate their five-year growth estimates. If you accept them at face value, you willoverpay for stocks. But even though you should definitely take the analysts' prognostications with a grain of salt, they can still provide a useful starting point when compared with similar numbers from a company's closest rivals.

Let's start by seeing what this company's done over the past five years. In that time period, Accenture has put up past EPS growth rates of 11.9%. Meanwhile, Wall Street's analysts expect future growth rates of 12.1%.

Here's how Accenture compares with its peers for trailing five-year growth:

The bottom lineThe pile of numbers we've plowed through has shown us how cheap shares of Accenture are trading, how consistent its performance has been, and what kind of growth profile it has -- both on an absolute and a relative basis.

The more consistent a company's performance has been and the more growth we can expect, the more we should be willing to pay. We've gone well beyond looking at a 16.6 P/E ratio.

As a former employee and a current shareholder, I have a soft spot in my heart for Accenture. The company is one I respect. As for the stock, it's had a run-up, but it's still worth at least a watchlist placement.